Is my Nonqualified Deferred Compensation under code 409 to be listed as a 457 pension?

[bench350]

How will TurboTax know that I paid all SS tax and Medicare upfront in 2016 when I retired, although compensation is paid over 20 years? I don't see any check or indication on my W2 indicating it is a retirement plan but I know it is a NQDC set up under code 409 as a Top-Hat Plan.

[DanO · Accepted solution]

This is not a 457b pension, that would be a Deferred Compensation plan

A Non-qualified Deferred Compensation is generally taken into account as wages for FICA (SS and Medicare) purposes at the time when the services giving rise to the compensation are performed, at which time employers are required to withhold and remit the FICA taxes which has happened in your case.

So everything was set up properly for you to receive your compensation over a period of time with only the income tax due. When you receive you W-2 there should not be any withholding indicated in box 4 and 6.

[howardnichols-op]

So why is TurboTax calculating additional medicare tax?

[JulieS]

If TurboTax is calculating additional Medicare tax, it is based on your income level and filing status.

There is an additional Medicare tax on wages and self-employment earnings for those who exceed these thresholds.

• Married filing jointly - $250,000
• Married filing separate - $125,000
• Single - $200,000
• Head of household (with qualifying person) - $200,000
• Qualifying widow(er) with dependent child - $200,000

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